The biggest threat to McDonald’s and Coke is actually “diet pills”

It is said that Koreans who love drinking iced American food have evolved out of sleep. What can reduce obese Americans’ desire for junk food?

Recently, Morgan Stanley issued an 82-page report to answer this question.

Coke, Oreo, and McDonald's may be struggling to sell the most popular "weight loss miracle shot."

The "old enemy" of McDonald's and Coke is actually a "diet pill"

The “weight loss pills” here mainly refer to Wegovy and Ozempic from Danish pharmaceutical giant Novo Nordisk.

The former is a weight loss drug for obese and overweight people, and the latter is a type 2 diabetes drug. However, non-diabetic people of normal weight also flock to them and try their best to get prescription drugs.

This is because they share the same active ingredient, which mimics the hormone GLP-1 in the body, slowing digestion and reducing appetite.

The feeling of fullness is stronger, the desire for food is reduced, and there is no need to test your willpower. Wouldn’t it be easy to lose weight?

Although the effects vary from person to person and the side effects need to be studied, the simple truth has attracted a large number of believers. Sales of GLP-1 drugs in the United States soared by 300% from 2020 to 2022.

Even Musk endorsed them, and his personal experience became a successful example of getting rid of fat.

With more fans, the situation becomes more complicated. Reducing appetite not only means eating less, it is also likely to lead to changes in eating habits, turning into a butterfly flapping its wings and threatening the future of food giants.

This summer, a Morgan Stanley study of 300 drug users showed that GLP-1 drugs can reduce daily calorie intake by 20% to 30%.

If you take in 2,000 calories a day, that's roughly equivalent to eating less potato chips than 100 grams.

The question is, where exactly are the calories reduced?

Two-thirds of those surveyed started eating less sweets, sugary drinks and baked goods. In addition to packaged foods, more than 70% of respondents are visiting fast food restaurants and pizza parlors less frequently.

At the same time, GLP-1 drugs can also help curb certain addictive behaviors such as smoking and drinking. More than 60% of the respondents have reduced their drinking, and nearly 25% have completely given up drinking.

Although the survey sample is small, in the face of the US food industry with a total value of nearly 1 trillion US dollars, any disturbance may brew a big storm, not to mention that the obesity rate in the United States is close to 43%, and the weight loss drug market is far from reaching its peak.

Morgan Stanley predicts that by 2035, 7% of the U.S. population (24 million people) may be taking GLP-1 weight loss drugs.

Based on this premise, U.S. consumers are expected to reduce their calorie intake by 1% to 2%, consumption of soda, candy, baked goods and salty snacks will decrease by 3%, alcohol consumption will decrease by 2%, and sales of fast food chains will decrease. The amount is reduced by 1% to 2%.

Barclays, the UK's second-largest bank after HSBC, also gave a similar analysis to Morgan Stanley, believing that the popularity of GLP-1 drugs may weaken demand for companies such as Pepsi-Cola and McDonald's.

These conclusions are good news for pharmaceutical companies such as Novo Nordisk and Eli Lilly, but they put a knife on the head of the food industry.

Not to mention the next 10 years, Wal-Mart has already noticed changes in its current performance.

John Furner, CEO of Walmart's U.S. operations, said in an interview with Bloomberg that diet pills are allowing people to buy less food, "with less food per unit and slightly fewer calories."

The health craze is ever-changing, but food giants are calm

However, changes in trends in the food industry never mean a decisive decision.

Seeing the possible butterfly effect of diet pills, brands that produce sodas, snacks, and cans are observing but still optimistic, feeling that the situation is still controllable and that it is too early to make decisions.

Campbell Soup, which inspired Andy Warhol to paint his famous Pop paintings, was a little shocked by the rapid rise of pharmaceutical companies, but did not think that its product line would completely collapse.

Uncertain of how much consumer behavior has changed, brands are acting like the famous meme of an egret with one foot extended, elegantly and cautiously testing out the waves.

Although Wal-Mart sells less snacks, it makes more money because its pharmacies also sell GLP-1 drugs.

In August, Walmart told analysts that sales of food, consumables and health products would rise one percentage point in the second half of the year, largely due to the popularity of GLP-1 drugs.

Customers taking diet pills tend to spend more money with us overall, even though they buy less food.

Mondelēz, which owns Oreo and other products, plans to launch snacks in smaller packages, with 200 calories or less and packaged individually.

In the past few years, we are no longer surprised that giants such as PepsiCo have acquired healthier and more niche emerging brands to make their product portfolios more diverse, green and global.

Rather than saying that the brand is trying to avoid being cut off by diet pills, it is better to say that "health" is a tacit general trend.

The Morgan Stanley report also mentioned that drug users will eat more fruits, vegetables, poultry and fish, as well as weight management products such as protein bars and nutritional shakes, which is not surprising at all.

It makes sense for food brands to remain cautious. There have been too many "crying wolf" stories in history. Sometimes they are villagers who have been deceived, and sometimes they are just children who talk shamelessly. As the CEO of food brand Saffron Road said:

We always go through cycles of a new miracle drug, a new miracle food ingredient.

In the 1970s, the natural food craze began. "You are what you eat" was espoused by hippies in the 1960s and used as a slogan for healthy eating.

In the 1990s, Olestra (a fat substitute) came out and once gained great popularity as a food additive. People wanted to use it to eat less butter and shortening.

But it turned out that Olestra was too "greedy", not only removing unnecessary fat, but also weakening the body's ability to absorb essential vitamins, and was eventually eliminated due to side effects such as cramping, bloating, and diarrhea.

▲Potato chips containing Olestra.

At the beginning of the 21st century, the Atkins Diet became popular again. It believed that the key to weight loss was to limit carbohydrate intake and eat more high-protein foods. This also promoted the birth of various low-carb water products. .

In 2004, a custard maker cited the Atkins diet when it filed for bankruptcy. However, by 2005, because it could not be proven to be effective in losing weight in the long term, this method was considered "food blindness" and gradually lost its halo.

▲Typical Atkins weight loss meal. Picture from: wiki

There is awareness of the pursuit of health, but the definition is still vague. These short-lived health trends, no one knows when the situation will reverse. Ironically, different snack categories ebb and flow, but the packaged food industry is only getting bigger and stronger.

Food giants don't believe that diet pills will really subvert human nature. In their view, the silent majority still "disrespects the integrity of the body". Smucker, an American manufacturer of food and beverage products, noted:

Consumers will continue to snack in a variety of ways, seeking out all different types of snacks, and sweets will continue to gain traction.

However, the trend this time is somewhat different. In addition to the food industry, companies that promote dieting and weight loss have also been affected.

Morgan Stanley data shows that once people start taking GLP-1 drugs, the proportion of people subscribing to a weight-loss plan drops from 29% to 20%.

In March this year, WeightWatchers, a well-known American light-weight company, spent US$106 million to acquire telemedicine platform Sequence to provide members with a subscription service for prescribing weight-loss drugs.

For decades, the company's philosophy that weight loss was all about willpower put pressure on people who didn't diet and exercise enough, but now, because of the popularity of diet pills, they're backing obesity as a disease.

To a certain extent, this is also the "removing the false and retaining the true" of health awareness. Novo Nordisk is not the first company to use GLP-1 research to create a diabetes drug, but it is the first company where scientists have successfully convinced others to use it to treat obesity.

Losing weight healthily and happily, the threshold is still very high

Musk, who has used Wegovy and Ozempic to lose weight, was surprised by their impact on Walmart. He also tweeted on October 7 to defend weight loss drugs:

Medications all have side effects, but the health problems associated with obesity almost certainly outweigh the risks of GLP-1 drugs.

This may be true from a health perspective, but Musk may not have noticed that there is another detail in the Morgan Stanley report that is not so related to food: many people simply cannot afford GLP-1 drugs, and only half of patients Enjoy insurance.

In the United States, an Ozempic injection pen can usually be used for about a month and costs about $900 before health insurance. The high price has led to some insurance companies not covering it.

At the same time, GLP-1 drugs are in limited supply and overloaded demand has overwhelmed pharmacies, making it difficult for patients who really need Ozempic to get it on time.

It is precisely because of these "off-market factors" that Wall Street analysts feel that GLP-1 drugs are not currently a big problem for the food industry.

These drugs remain expensive, inaccessible to many people, and do not guarantee widespread or long-term adoption.

Those who can afford Ozempic for a long time already belong to a group of people with a good income. Therefore, Morgan Stanley’s investigation may have fallen into “survivor bias.” RBC analyst Nik Modi captured this point keenly:

Consumption of junk food such as salty snacks is generally disproportionately high among low-income people, who are less likely to be major users of these drugs.

In addition, there have been many reports about side effects recently, pouring cold water on the overheated weight loss industry.

A study from the University of British Columbia found that using GLP-1 drugs to lose weight may increase the risk of pancreatitis, intestinal obstruction and gastric paralysis. In September, the FDA also updated Ozempic's label to warn about the possibility of intestinal obstruction.

Research on side effects is necessary, and this information actually shows that GLP-1 drugs should be used with caution, followed medical advice, and given to those who need them most. Novo Nordisk, which develops Wegovy and Ozempic, noted:

Our clinical trial data for Wegovy showed that, not unexpectedly, patients regained weight once they stopped taking the drug. This supports the belief that obesity is a chronic disease that requires long-term management, with most patients receiving treatment over the long term.

Losing weight is an arduous and long-term struggle. Weight-loss drugs provide the illusion of a shortcut, but in fact it is still a long road. Few people are qualified to take this road. The snack shelves in supermarkets cannot be renovated overnight.

Morgan Stanley does not entirely criticize junk food and chain fast food brands. It also mentioned in the report:

Restaurants are never just about food. They sell convenience with limited service and experience with full service.

This is just like the trend of domestic migrant workers’ pre-made dishes and white rice. The industrial seasoning packets of “Technology and Hardwork” bring taste stimulation. The simple method without using fire makes it easier to absorb nutrients and maintain vital signs. First, don’t starve to death. Let’s talk about nutrition and health.

You eat white people's rice, I eat prepared dishes. Musk, who has a professional nutritionist and a personal trainer, has lost weight by using weight loss pills. Food giants have been trying to figure out how to make the ingredient list more beautiful for decades. Everyone has a bright future. .

It is as sharp as autumn frost, and can ward off evil disasters. Work email: [email protected]

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